India?S Fickle Telecom Kismet

Tech Talk

Indian telecoms, a senior executive with a North American vendor told me cynically some years back, have done little more than providing good copy for journalists.

As one of the tribe involved in covering the industry "� partly, for some time "� since telecom services were opened to private competition, I've found it absorbing watching the fortunes of various participants in the telecom game.

Essar Cellular, for instance, rode the telecom boom confidently in the early nineties and said telecom was the next big thing in its scheme of things for the steel-to-shipping-to-oil conglomerate.

However, very soon the group, saddled with debt in its oil refinery and stressed by falling steel prices, found it difficult to raise the equity needed to fund expensive telecom networks and gave up control to Hong Kong partner Hutchison Telecom.

It did not help that quite a bit of energy and time of the group's top management was diverted in combating corporate rivals.

Other start-with-a-bang-end-with-a-whimper examples abound. Escorts, then a tractor-to-motorbike business, had three licences, in Uttar Pradesh (West), Haryana and Kerala.

The Nandas, who see themselves as blue-blooded businessmen, were supremely confident that they had a good enough franchise that they could build upon cheaply.

In fact, the grapevine went, Rajan Nanda, the older of the two brothers who run the group, once offered Sunil Mittal, the prime mover in the Bharti group, "Rs 10-15 crore" for the Delhi licence because he thought the young Mittal did not have it in him to bankroll the business.

Times have changed and Bharti Telecom "� today, the group's service flagship is Bharti Televentures "� that had just the Delhi cellular licence (and, one in the small Himachal Pradesh) to hold on to in the telecom wave, has bloomed, while Escotel is an also-ran.

The gutsy and street-smart (some call him wily) Mittal, his brothers, and lieutenant Akhil Gupta built the business brick by brick, courted "� and divorced "� partners carefully, acquired new licences, cajoled bankers to extend credit limits and today have a valuable service "� the business is valued at over Rs 1,000 crore "� and brand they can boast of.

So too with Bharat Sanchar Nigam Ltd, the Indian telecom giant in slow motion. The private telecom industry has had to eat its own words that BSNL was committing hara-kiri entering cellular telephony.

On the contrary, the New Delhi-owned company has fast risen to the top of the league tables and is making life difficult for sales persons and bean counters in private cellular companies.

BSNL has a service that its not-so-rich (its ARPU or average revenue per user is reportedly under Rs 350 a month) clientele swears by and has customers churning from other service providers.

Reliance Infocomm, part of the oil-to-textile, energy-to-life science Reliance group, is the latest addition to my "Rise & Fall of Indian Telecos" list.

While starting its CDMA (code division multiple access, a U.S. telecoms technology)-based wireless in local loop service, the company was fairly brazen about some of its offerings like roaming (it has a "temporary subscriber service" jargon to describe it) and short messaging service.

It has time and again maintained that it was very much within the law in making these offerings. (I don't agree in these specific instances, although I think its wireless service is fully above board.)

After much to-ing and fro-ing in the corridors of power and courts, Reliance Infocomm received its first blow from Justice D P Wadhwa of the Telecom Disputes Settlement Appellate Tribunal (TDSAT), when he criticised the manner in which the company was allowed to start the service.

Then, in recent weeks, what started as a murmur within the federal government's group of ministers on telecom on Reliance Infocomm's alleged violation of telecom rules of the land has become a virtual threat that the company had better fall in line.

The Reliance "� and, don't forget, Tata Teleservices that has WLL services in six states "� telecom saga has come a full circle: from a confident launch to a fight to protect its turf.

The Association of Basic Telecom Operators, a lobbyist that represents Reliance, Tatas and other fixed-line telecom companies, has gone to court against levying an additional entry fee for WLL services as ordered by TDSAT in August.

I cannot recall the last time such powerful interests "� including Reliance, which prides itself in managing the business environment "� were in court against the government on a policy issue.

In the days ahead, I am sure I will fill more pages of my metaphorical diary on more such telecom experiences. But I am not sure if the Indian consumer and the country's telecom industry are best served by such experiences, which are admittedly entertaining to the scribe in me.

Josey Puliyenthuruthel works at content company perZuade. His views are personal and may not be endorsed by his employer, the company's investors, customers or vendors. Comments may be sent to josey@perzuade.com